Qantas Airways Ltd v Transport Workers' Union of Australia
[2022] FCAFC 71
•4 May 2022
FEDERAL COURT OF AUSTRALIA
Qantas Airways Ltd v Transport Workers’ Union of Australia [2022] FCAFC 71
Appeal from: Transport Workers’ Union of Australia v Qantas Airways Limited (No 2) [2021] FCA 873
Transport Workers’ Union of Australia v Qantas Airways Limited (No 4) [2021] FCA 1602
File number(s): NSD 927 of 2021
NSD 7 of 2022Judgment of: BROMBERG, RANGIAH AND BROMWICH JJ Date of judgment: 4 May 2022 Catchwords: INDUSTRIAL LAW – employer appeal – adverse action – decision of Qantas to outsource ground handling operations during COVID-19 pandemic – appeal from the decision of the primary judge finding that Qantas Airways Ltd contravened s 340(1)(b) of the Fair Work Act 2009 (Cth) (FW Act) – construction of s 340(1)(b) of the FW Act – whether s 340(1)(b) requires a person to have presently existing workplace right – consideration of the reverse onus under s 360(1) of the FW Act – whether the primary judge erred in finding that Qantas Airways had not discharged the onus under s 360(1) of the FW Act – consideration of corporate decision-making – whether the primary judge erred in finding that a substantial and operative reason of a person who was not the decision-maker was to prevent the exercise of workplace rights by the affected employees – notice of contention – whether the primary judge should have found that the reasons of the decision-maker were infected by persons who had a substantial influence on the decision-maker – whether the primary judge erred by making the declaration in respect of non-union employees – appeal dismissed
INDUSTRIAL LAW – union appeal – reinstatement – appeal from the decision of the primary judge not to make an order granting “global” reinstatement – whether primary judge erred in considering or affording determinative weight to the cost and inconvenience of reinstatement to Qantas Airways – whether the primary judge impermissibly concluded that s 545 of the FW Act required a comparison between compensation and reinstatement or whether the primary judge failed to undertake such a task – whether the primary judge erred by taking into account the absence of clarity as to the quantum of prospective compensation – whether the primary judge erred in finding or taking into account that the affected employees would be reinstated to little or no work – whether the primary judge erred in relation to the difficulties with Qantas Airways complying with a reinstatement order or further disputation – whether the primary judge erred in finding or taking into account that Qantas Airways intended to retrench the affected employees if reinstatement were ordered – appeal dismissed
Legislation: Commonwealth Conciliation and Arbitration Act 1920 (Cth)
Conciliation and Arbitration Act 1904 (Cth) ss 5, 9
Evidence Act 1995 (Cth) s 140
Fair Work Act 2009 (Cth) Pt 3-1, Pt 3‑3 Div 8, ss 12, 336, 340, 341, 342, 343, 345, 346, 347, 361, 408, 415, 417, 545, 546
Industrial Relations Act 1988 (Cth)
Workplace Relations Act 1996 (Cth) ss 298K, 298L, 792, 793
Workplace Relations Amendment (Work Choices) Act 2005 (Cth)
Criminal Property Forfeiture Act 2002 (NT) s 94(1)
Occupational Health and Safety Act 2004 (Vic) Pt 7 Div 4
Cases cited: Alam v National Australia Bank Ltd [2021] FCAFC 178; 310 IR 71; 393 ALR 629
Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; 261 FCR 301
Attorney-General (NT) v Emmerson [2014] HCA 13; 253 CLR 393
Australasian Meat Industry Employees’ Union v Sunland Enterprises Pty Ltd (1988) 81 ALR 213
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 262 CLR 157
Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621
Australian Red Cross Society v Queensland Nurses’ Union of Employees [2019] FCAFC 215; 273 FCR 332
Barclay v Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14; 191 FCR 212
Blackadder v RamseyButcheringServices Pty Ltd (2005) 221 CLR 539
Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 248 CLR 500
Bowling v General Motors Holdens Ltd (1980) 33 ALR 297
Briginshaw v Briginshaw (1938) 60 CLR 336
Burnie Port Corporation Pty Ltd v Maritime Union of Australia [2000] FCA 1768; 104 FCR 440
CCL Secure Pty Ltd v Berry [2019] FCAFC 81
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
Construction, Forestry, Mining & Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697
Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157; 238 FCR 273
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41; 253 CLR 243
Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Ltd [2015] FCA 1014; 253 IR 166
Cummins South Pacific Pty Ltd v Keenan [2020] FCAFC 204; 281 FCR 421
Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union [2001] FCA 349; 112 FCR 232
Dowling v Fairfax Media Publications Pty Ltd (ACN 003 357 720) (Formerly John Fairfax Publications Pty Ltd) [2008] FCA 1470; 176 IR 346
Elliott v Kodak Australasia Pty Ltd [2001] FCA 1804; 129 IR 251
Fair Work Ombudsman v Australian Workers’ Union [2017] FCA 528; 271 IR 139
Fox v Percy [2003] HCA 22; 214 CLR 118
House v The King (1936) 55 CLR 499
Leahey v CSG Business Solutions (Aus) Pty Ltd [2017] FCA 1098
Lovell v Lovell (1950) 81 CLR 513
Ltd [2004] FCA 1661; 142 FCR 296
March v E & M H Stramare Pty Ltd [1991] HCA 12; 171 CLR 506
Maritime Union of Australia v CSL Australia Pty Ltd [2002] FCA 513; 113 IR 326
Martin v Norton Rose Fulbright Australia [2021] FCAFC 216
Minister for the Environment v Sharma [2022] FCAFC 35
Newton v Australian Postal Corporation (No 2) [2019] FCA 2192; 292 IR 396
Norbis v Norbis (1986) 161 CLR 513
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15; 274 FCR 225
Qantas Airways Limited v Transport Workers’ Union of Australia [2021] FCA 1136
RRG Nominees Pty Ltd v Visible Temporary Fencing Australia Pty Ltd (No 4) [2019] FCA 686
Ruthol Pty Ltd v Tricon (Aust) Pty Ltd [2005] NSWCA 443
Services Board v Gillespie-Jones [2013] HCA 35; 249 CLR 493
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249
Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84
Trade Practices Commission v CSR Ltd [1991] ATPR ¶41-076
Transport Workers’ Union of Australia v Qantas Airways Ltd [2021] FCA 873; 308 IR 244
Transport Workers’ Union of Australia v Qantas Airways Ltd (No 2) [2021] FCA 1012; 308 IR 333
Transport Workers’ Union of Australia v Qantas Airways Limited (No 3) [2021] FCA 1339
Transport Workers’ Union of Australia v Qantas Airways Limited (No 4) [2021] FCA 1602
Waters v Commonwealth of Australia (Australian Taxation Office) [2015] FCAFC 46
Wongv National Australia Bank Limited [2021] FCA 671
Division: Fair Work Division Registry: New South Wales National Practice Area: Employment and Industrial Relations Number of paragraphs: 431 Date of hearing: 24 & 25 February 2022 NSD 927 of 2021 Counsel for the Appellants: Mr B Walker SC with Mr T Prince and Ms N Oreb Solicitor for the Appellants: Herbert Smith Freehills Counsel for the Respondent: Mr N Hutley SC with Mr M Gibian SC and Mr P Boncardo Solicitor for the Respondent: Maurice Blackburn NSD 7 of 2022 Counsel for the Appellant: Mr N Hutley SC with Mr M Gibian SC and Mr P Boncardo Solicitor for the Appellant: Maurice Blackburn Counsel for the Respondents: Mr B Walker SC with Mr T Prince and Ms N Oreb Solicitor for the Respondents: Herbert Smith Freehills ORDERS
NSD 927 of 2021 BETWEEN: QANTAS AIRWAYS LTD (ACN 009 661 901)
First Appellant
QANTAS GROUND SERVICES PTY LTD (ACN 137 771 692)
Second Appellant
AND: TRANSPORT WORKERS' UNION OF AUSTRALIA
Respondent
ORDER MADE BY:
BROMBERG, RANGIAH AND BROMWICH JJ
DATE OF ORDER:
4 MAY 2022
THE COURT ORDERS THAT:
1.The appellant’s appeal be dismissed.
2.The respondent’s cross-appeal be dismissed.
3.The respondent’s notice of contention be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 7 of 2022 BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA
Appellant
AND: QANTAS AIRWAYS LTD (ACN 009 661 901)
First Respondent
QANTAS GROUND SERVICES PTY LTD (ACN 137 771 692)
Second Respondent
ORDER MADE BY:
BROMBERG, RANGIAH AND BROMWICH JJ
DATE OF ORDER:
4 MAY 2022
THE COURT ORDERS THAT:
1.The appellant’s appeal be dismissed.
2.The respondent’s notice of contention be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
REASONS FOR JUDGMENT
BROMBERG, RANGIAH AND BROMWICH JJ:
INTRODUCTION
[1]
OVERVIEW
[5]
THE QANTAS APPEAL
[26]
The liability judgment and resulting order in the form of a declaration
[26]
Consideration
[84]
Ground 1: The construction of s 340(1)(b)
[84]
Grounds 2 and 3: Whether Qantas Airways discharged the onus of rebutting the presumption under s 361(1)
[140]
Ground 2
[149]
Ground 3
[184]
Ground 4 and the TWU notice of contention: The influence of Mr Jones and Mr Hughes on Mr David
[191]
Ground 4
[204]
The TWU notice of contention
[219]
Ground 5: The scope of the declaration in relation to non-union employees
[242]
Conclusion on the Qantas appeal
[253]
THE TWU APPEAL
[254]
Procedural history
[259]
The agreed facts
[270]
The reinstatement judgment
[273]
Consideration
[311]
Grounds 1(a)-(d) and 2: Cost and inconvenience to Qantas
[311]
Ground 1(e) and Ground 3: Comparing alternative remedies of reinstatement and compensation
[364]
Ground 4(a): Lack of clarity as to the alternative compensation remedy
[380]
Ground 4(b)–(c): The affected employees would be reinstated to little or no work
[392]
Ground 5: Perceived difficulties in compliance and future disputation
[404]
Ground 6: Qantas’ intention to again retrench employees if reinstated
[415]
Conclusion on the TWU appeal
[430]
CONCLUSION OVERALL
[431]
INTRODUCTION
The applicant in the proceeding before the primary judge, the Transport Workers’ Union of Australia (TWU), alleged adverse action on the part of the respondent, Qantas Airways Ltd, contrary to ss 340(1)(a), 340(1)(b) and 346(a) of the Fair Work Act 2009 (Cth) (FW Act) in making a decision on 30 November 2020 to outsource ground handling operations work at 10 Australian airports (outsourcing decision). The TWU also sought reinstatement of the employees who had lost their jobs consequent upon proving one or more of the alleged adverse actions under s 545.
In these reasons, all statutory provisions referred to are those of the FW Act unless expressly stated to the contrary.
The primary judge conducted four hearings resulting in the delivery of the following four judgments:
(a)after a trial on liability, his Honour found adverse action to be established contrary to s 340(1)(b), but not contrary to s 340(1)(a) or s 346(a): Transport Workers’ Union of Australia v Qantas Airways Ltd [2021] FCA 873; 308 IR 244 (liability judgment or LJ);
(b)after a hearing on the appropriate form of declaration, his Honour made an order in the form of a liability declaration, giving additional reasons: Transport Workers’ Union of Australia v Qantas Airways Ltd (No 2) [2021] FCA 1012; 308 IR 333 (declaration judgment or DJ);
(c)his Honour conducted a case management hearing as to the future conduct of the proceeding, deciding that a hearing on the application for reinstatement should precede any hearing on compensation and pecuniary penalties: Transport Workers’ Union of Australia v Qantas Airways Limited (No 3) [2021] FCA 1339 (case management judgment);
(d)his Honour heard and dismissed the TWU’s application for reinstatement: Transport Workers’ Union of Australia v Qantas Airways Limited (No 4) [2021] FCA 1602 (reinstatement judgment or RJ).
There are now appeal proceedings both against the liability declaration and against the dismissal of the reinstatement application, a notice of contention in each of those appeal proceedings, and a cross-appeal on liability.
OVERVIEW
The allegations of adverse action by the TWU were based upon a carefully considered and planned process culminating in the making of the outsourcing decision on 30 November 2020 on behalf of Qantas Airways by the Chief Executive Officer of Qantas Domestic and International, Mr Andrew David. At the time of the outsourcing decision, any ground handling operations work at those 10 airports was performed by both the relevant Qantas Airways employees and by employees of a wholly owned Qantas Airways subsidiary, Qantas Ground Services Pty Ltd (QGS), QGS employees.
In these reasons:
(a)the collective term used for both Qantas Airways and QGS is Qantas; and
(b)the collective term for the Qantas Airways employees and the QGS employees is the affected employees.
The effect of the outsourcing decision was that ground handling operations work for Qantas Airways performed by the Qantas Airways employees and the QGS employees was instead to be carried out by staff employed by third-party ground handling companies contracted to provide those services. There was little or no scope for such work to take place at the time of the outsourcing decision due to the grounding of much of all of the Qantas Airways aircraft fleet by reason of the COVID-19 pandemic.
The timeframe within which the resumption of Qantas Airways flights might have taken place was uncertain in the lead up to 30 November 2020. However, it was common knowledge that prospects of at least some degree of civil aviation resuming seemed to be improving towards the end of 2020, due to the receding effects of the pandemic and substantial progress being made with the development of COVID-19 vaccines both in Australia and overseas. There was no indication of the particular problems with the vaccination rollout in Australia that emerged in the earlier part of 2021.
Prior to any outsourcing decision being made, Qantas Airways was required by its enterprise agreement to provide the Qantas employees with an opportunity to participate in an in-house bid process (IHB) enabling the employees to bid competitively to continue to provide the ground handling services. That requirement had the obvious consequence that the TWU as well as the affected employees would be notified that Qantas Airways was considering outsourcing its ground handling function well prior to any such decision being made.
In December 2020:
(a)the Qantas Airways fleet continued to be grounded due to the absence of flights in Australia and abroad;
(b)protected industrial action (PIA) (described by s 408 and immune from suit by reason of s 415) was not legally possible in the case of the Qantas Airways employees because s 417 prohibited any organisation of or engagement in industrial action, and therefore any PIA or steps to organise any PIA, before the nominal expiry date of the relevant enterprise agreement on 31 December 2020; and
(c)PIA was not legally possible in the case of the QGS employees because, while their enterprise agreement had reached its notional expiry date so that s 417 did not apply, the preliminary steps necessary to engage in PIA had not in fact been taken, including in particular a PIA ballot (see Pt 3‑3 Div 8).
The making of the outsourcing decision on 30 November 2020 meant that the scope for any PIA in 2021, and any preparation for such PIA for the balance of 2020, was effectively eliminated. That is because once that decision was made, there was not going to be any new enterprise agreement to negotiate either for the Qantas Airways employees, or for the QGS employees. Accordingly, neither class of employees, nor the TWU on behalf of any of them, could genuinely take, or organise taking, any PIA, because neither could credibly point to negotiating for a new enterprise agreement as the legitimate reason for such action (see ss 408 and 409).
The decision-making process for Qantas Airways overtly involved consideration of three commercial imperatives for making the outsourcing decision. They were summarised by the primary judge (at LJ [138]) as being to “(a) achieve the two-year cost targets by reducing operating costs; (b) increase variability in the cost base; and (c) minimise capital expenditure, grow customer confidence and deliver ongoing business improvement”. Additionally, because of the grounding of the fleet during the pandemic, there was an unprecedented opportunity to obtain those benefits without the usual longstanding countervailing risks or disadvantages. So long as aircraft were not flying, any disruption from the changeover to outsourcing itself or from changeover-related industrial activity, logically could not affect flying operations.
The grounding of the fleet meant that in late 2020 and early 2021, the TWU, ground handling operations employees who were members of the TWU, and non-member ground handling operations employees, had probably never been more industrially impotent in resisting outsourcing, including seeking to have the outsourcing decision reversed. By making the outsourcing decision on 30 November 2020, the identified benefits could be advanced, while reducing or even eliminating the costs, both operational and industrial, both at the decision-making stage and at the implementation stage.
The live question before the primary judge was whether any substantial and operative part of the reasons for making the outsourcing decision was proscribed. The primary judge considered the outsourcing decision in the overall context in which it was made and did not confine his Honour’s consideration only to the form in which Qantas Airways chose to present and justify that decision.
The underlying dispute therefore not only concerns the content of the outsourcing decision as announced and otherwise described in the evidence adduced by Qantas Airways, including the reasons overtly given for making that decision, but also the significance of any other reasons for that decision, including its timing, and whether that timing may reasonably be considered to be a part of that decision.
Qantas seeks to avoid any distinction being drawn between the making of the outsourcing decision and any issue as to its timing on the one hand, and its implementation on the other. Qantas also asserts that the timing of the outsourcing decision deprived it of having proscribed status because it contends that there was no extant workplace right which could be prevented from being exercised at that time, so as to take it outside the operation of s 340(1)(b). As noted below, the TWU’s case failed in relation to allegations of adverse action contrary to s 340(1)(a) and contrary to s 346(a), with only the latter sought to be re-agitated on appeal.
The outsourcing decision was implemented when the Qantas Airways fleet was still grounded, and still expected to be grounded for some further period of time of a duration that was not certain. It is important not to be distracted by the ex post facto knowledge that flying did not resume at any material time, being in the first quarter of 2021, flowing into and potentially affecting any change in the second quarter of 2021 or immediately thereafter, because that could not be known, at least with any real degree of certainty, in the lead up to 30 November 2020.
The implementation of the outsourcing decision took place progressively from late January 2021 and was complete by the end of March 2021. As the outsourcing decision was implemented, any ground handling operations work formerly performed by the affected employees was instead carried out by staff employed by third-party ground handling companies who had been contracted to provide those services to Qantas Airways. All of the ground handling operations roles that had been fulfilled by those affected employees were made redundant, and they were all either retrenched or redeployed.
The TWU sued Qantas Airways by an originating application and statement of claim, each amended once, alleging adverse action by making the outsourcing decision, and principally seeking reinstatement of the affected employees. Following a separate liability hearing, the primary judge found:
(a)that the outsourcing decision contravened s 340(1)(b) because it was made for reasons that included a proscribed reason defined by his Honour as the Relevant Prohibited Reason, namely, preventing the exercise by the affected employees of their workplace right to organise and engage in PIA and participate in bargaining in 2021, because Qantas Airways had not discharged the onus imposed by s 361 of displacing that as a substantial and operative reason;
(b)that adverse action in making the outsourcing decision by reason of certain of the employees being union members contrary to s 346(a) had not been proven; and
(c)that the outsourcing decision fell short of adverse action as a substantial and operative reason with respect to:
(i)the affected employees who were entitled to the benefits of their respective enterprise agreements; and
(ii)other pleaded grounds including union membership and the ability at the time of the outsourcing decision to participate in a process under the FW Act to initiate or participate in bargaining for the making of an enterprise agreement, contrary to s 340(1)(a),
a conclusion that is not challenged and does not need to be considered further.
The primary judge expressly stated that the only proscribed purpose in making the outsourcing decision that was consistent with the evidence and had not been disproved was that pleaded in substantially the same form as found to be established in relation to s 340(1)(b), as noted at [19(a)] above.
The primary judge conducted a further hearing and delivered further reasons ex tempore on 25 August 2021, making the following order in the form of a declaration, reflecting the findings made by his Honour in the liability judgment:
The respondent (Qantas [Airways]) by its Chief Executive Officer, Qantas Domestic and International, in making the decision announced on 30 November 2020 to outsource its ground handling and fleet presentation operations at ten Australian airports (relevant airports) to third party providers, engaged in conduct which contravened s 340(1)(b) of the Fair Work Act 2009 (Cth) (Act), by taking adverse action against:
(a)employees of Qantas [Airways] who performed ground handling and fleet presentation work at the relevant airports and whose employment was covered by the Qantas Airways Limited and QCatering Limited – Transport Workers Agreement 2018 (Qantas [Airways] employees) for the purposes of Item 1(c) of s 342(1) of the Act by prejudicially altering Qantas employees’ positions; and
(b)employees of Qantas Ground Services Pty Limited (QGS) who performed ground handling and fleet presentation work at the relevant airports and whose employment was covered by the Qantas Ground Services Pty Limited Ground Handling Agreement 2015 (QGS employees) for the purposes of Item 3(c) of s 342(1) of the Act by altering QGS’ position to its prejudice in relation to its contract for services with Qantas,
for reasons, which included to prevent the exercise by the Qantas [Airways] employees and QGS employees in 2021 of their workplace right, following the nominal expiry of the relevant enterprise agreements, to: (i) organise and engage in protected industrial action or a protected action ballot for the purpose of supporting or advancing claims in relation to a proposed enterprise agreement; and (ii) participate in enterprise bargaining, under the Act.
QGS was joined as a second respondent to the proceeding before the primary judge prior to the hearing of the TWU’s reinstatement application under s 545, based upon the adverse action declaration. Reinstatement relief was subsequently refused by his Honour following an ex tempore judgment, published as the reinstatement judgment.
The declaration arising from the liability judgment and the dismissal of the reinstatement application have given rise to the following:
(a)Qantas Airways and QGS appeal (and if need be, seek leave to appeal), from the declaration of adverse action, relying upon five grounds of appeal (Qantas appeal).
(b)The TWU relies upon a notice of contention in the Qantas appeal to assert that the declaration of adverse action could be supported upon two grounds other than those relied upon by the primary judge (TWU notice of contention).
(c)The TWU cross-appeals in the Qantas appeal against the primary judge’s finding that the s 346(a) adverse action had not been proven, relying upon three grounds (TWU cross-appeal).
(d)The TWU appeals by leave from the dismissal of the reinstatement application, relying upon six grounds (TWU appeal).
(e)Qantas Airways and QGS rely upon a notice of contention in the TWU appeal to assert that the dismissal of the reinstatement application could be supported on another ground (Qantas notice of contention).
The outcome of each of these proceedings is as follows. None of the grounds in either the Qantas appeal or in the TWU appeal have succeeded. It follows that both appeals must be dismissed. The TWU cross-appeal and the Qantas notice of contention do not arise. Finally, the TWU has failed to make good on its case in the TWU notice of contention.
Qantas also sought leave to appeal in the Qantas appeal. Leave would be necessary if the declarations made by the primary judge are properly characterised as interlocutory orders. For present purposes it is unnecessary for this Court to determine the point. If leave was required, we grant it.
THE QANTAS APPEAL
The liability judgment and resulting order in the form of a declaration
The liability judgment is lengthy and detailed. This summary is confined to capturing the essence of what the primary judge decided and how in order to contextualise the competing arguments advanced in this Court.
The primary judge, after describing the case in general, addressed in detail a number of important preliminary issues, including the difficulties occasioned both for the competing cases and for the assessment of the evidence by the reliance of the parties on affidavit evidence in chief rather than oral evidence. While his Honour expressed a general preference for contemporaneous documentary evidence, that was qualified by the way in which that record, and the affidavit evidence by which it was presented, appeared to have been prepared. His Honour described each of five Qantas witnesses in terms of their role and their general credit.
It is only necessary to refer to that witness assessment for Mr Paul Jones, Mr Colin Hughes and Mr Andrew David and not that assessment for Mr Paul Nicholas or Mr Andrew Finch. However, it is convenient to state here their respective roles:
(a)Mr Jones was the Chief Operating Officer of Qantas Airlines, and before taking on that position in mid-2020 was Executive Manager of Freight & Australian Airports.
(b)Mr Hughes was the Executive Manager, Qantas Airports from September 2019 to February 2021.
(c)Mr Nicholas was the Head of Strategic Business Planning, and his role included the design of initiatives and methods to improve cost efficiencies in the Australian Airports business.
(d)Mr Finch is a solicitor and was employed as the General Counsel & Group Executive, Office of the Chief Executive Officer and Company Secretary.
(e)Mr David was the Chief Executive Officer of Qantas Domestic and International.
The primary judge found that Mr Jones was an unimpressive witness. This conclusion infused his Honour’s assessment of that evidence in its context. His Honour gave a specific, detailed and important, but non-exhaustive, example of why that conclusion had been reached by reference to an important contemporaneous document for a meeting of the group management committee (GMC) that had been hand-annotated by Mr Jones, addressed in more detail below. That document was not referred to in Mr Jones’ affidavit, but made the subject of cross-examination in which he was observed by his Honour to be uncomfortable, and his manner unpersuasive. The conclusion his Honour reached was that Mr Jones was feigning a lack of recollection as to what was in his mind when he made the annotations which went directly to the issue of the reasons for the outsourcing decision, casting doubt on his evidence on that topic more generally. Mr Jones was found to be willing to fashion his evidence to suit what he perceived to be the forensic advantage to Qantas Airways, and therefore his Honour did not consider it safe to place any significant reliance upon that evidence. These findings reflected the advantages enjoyed in the assessment of evidence as it unfolded that it is almost impossible for an appeal court to gainsay. Qantas made no serious attempt to do so.
The primary judge found Mr Hughes to be a somewhat more impressive witness than Mr Jones, but found his desire not to depart from his affidavit evidence in some respects less than compelling. His Honour gave two examples, and indicated they could be supplemented, which resulted in his Honour having difficulty in accepting that Mr Hughes was always doing his best to give candid answers.
In relation to Mr David, the primary judge rejected a TWU submission that he attempted to mislead the Court deliberately in all material respects, with aspects being found to have a “crystal-clear ring of clarity” which was absent from other witnesses in relation to a process called an in-house bid and the likelihood that outsourcing would occur. The IHB was put forward as an alternative to outsourcing, but on the evidence as considered by his Honour was plainly never considered by Qantas Airways to have been a serious financial alternative to outsourcing. His Honour found that while Mr David was more realistic than others in this aspect of his evidence, that did not mean that in all respects his evidence was satisfactory. In particular, referring to the benefit of seeing the cross-examination on the topic of the level of union membership in Qantas Airways and QGS and the influence of the TWU, his Honour had real difficulty in accepting, as effectively asserted in that evidence, that Mr David did not hold a view or belief as to whether that union membership was closer to 1% or 99%, or needed assistance in understanding what the word “influential” meant. His Honour regarded this evidence as being indicative of a perceived desire not to make concessions. His Honour returned to the credibility of Mr David’s evidence when making the ultimate findings, addressed below.
The primary judge then made detailed findings as to what had occurred from early 2020 until the making of the outsourcing decision on 30 November 2020, starting with the emergence of an outsourcing decision as an option in early 2020 and culminating in that decision being made and its implementation being announced on 30 November 2020. Key aspects of that chronological set of findings can be summarised as follows.
As at January 2020, Qantas Airways intended that there be no foreseeable change to its ground handling operations at the 10 airports where that had been historically performed by employees like the affected employees.
In early February 2020, progressive restrictions on travel were being imposed as a result of the COVID-19 pandemic, first for international travel and then for domestic travel.
In late April 2020, Mr Hughes had discussions with Mr Jones, who informed him that Qantas Airways management had begun to grapple with the potential impact of the pandemic and that significant changes were needed to remain viable, with Mr Hughes being aware from this time that Qantas Airways was starting to think about transformation opportunities in the context of the pandemic.
On 1 May 2020, a GMC meeting was held, with the slides for that meeting under the heading “Operational Transformation” including on a list of “Prioritisation Criteria” the items “vanishing window of opportunity”, “value” and “feasibility”. The evidence of Mr Hughes was that “vanishing window of opportunity” was a reference to the pandemic causing almost complete reduction in flights and consequentially lower operational risk of outsourcing. Prior to any financial targets being set on 20 May 2020, the prevailing operating environment presented the first opportunity to outsource ground handling.
It was only on 20 May 2020, after the outsourcing decision had been raised as an option, that the financial targets were set. On that morning, Mr Hughes emailed himself notes from a conversation with Mr Jones. A few minutes later Mr Hughes forwarded those notes onto Mr Nicholas (the head of strategic planning) with that document including a handwritten annotation from Mr Jones (Voice-over annotation):
Voice-over labour Gov Lockin benefits + open EBAs 2020 DEC
The primary judge rejected the evidence of Mr Jones that he did not recollect what was in his mind when he made the above Voice-over annotation and did not accept that he could not recall what was later discussed relevant to the annotation at the GMC meeting. His Honour found it was much more probable than not, given Mr Jones thought it worthwhile to make the annotation proposing a voice-over, that a presentation to that effect was made by him to the GMC. His Honour found that when Mr Jones wrote “+ open EBAs 2020 DEC” that was meant to relate to a dot point on the document which read:
Evaluation of how options are superior to solving the current state. Why they are different for Customer vs Ground Ops.
His Honour accepted a TWU submission that this was a record of Mr Jones’ view that the option of outsourcing was superior given that the two enterprise agreements would be open from the end of December 2020. Among other findings, his Honour was reasonably satisfied that when Mr Jones wrote “+ open EBAs 2020 DEC”, he believed one reason for pursuing outsourcing in 2020 was to avoid Qantas Airways being in a position where it had to bargain with the TWU and its members from December 2020 and face the prospect of industrial action, just when he considered that flights might be getting back to some degree of normality in 2021.
Apart from the annotation and where it was written and his concerns about the credibility of Mr Jones, the primary judge was fortified in those conclusions for a least three reasons, being that:
(a)Mr Hughes agreed that the annotation was a reference to the fact that the Qantas Airways enterprise agreement would pass its nominal expiry date at the end of December 2020 and he had discussed this with Mr Jones;
(b)another “AA restart summary” presented to the GMC on 15 June 2020 demonstrated that Mr Jones was well aware about the opening of that enterprise agreement and that there was a risk this would concentrate power back into the TWU early in 2021 when Qantas Airways was growing domestic demand back and Virgin Airlines was potentially up on its feet and that the longer the decision was deferred the greater the increase in operational continuity risk, with Qantas Airways being unlikely to make any significant change in 2021 with an open enterprise agreement; and
(c)it seemed that Mr Jones considered it expedient to convey these views orally, which was more likely to be to prevent them being recorded, but even if that was not so, it was likely to reflect his candid views.
A slide presentation at a GMC meeting on 29 May 2020 included “Pathway to cost base requires TWU agreement and appears difficult”, which his Honour found reflected the views each of Messrs David, Jones, Hughes and Nicholas, being a meeting that involved an assessment of options “below the wing”, meaning ground services.
A slide presentation at a GMC meeting on 2 June 2020 included information from which the primary judge found that Messrs David, Jones and Hughes believed outsourcing was preferable to “rightsizing” the workforce, with the only real issue being whether it was too risky. The precise meaning of “rightsizing” does not appear to matter because it was an alternative to outsourcing that was not pursued. The primary judge at LJ [248] quoted from the evidence to indicate that it meant “surplus management savings in term of stand downs, leave burn and other flexibilities”, indicating that this was reference to achieving savings on employee costs in other ways.
On 11 June 2020, Qantas Airways received detailed advice from industrial relations consultants about the industrial risks of outsourcing, with that document being discovered, admitted into evidence and partially reproduced in the liability judgment. The advice detailed the likely reaction of the TWU to outsourcing, including utilising every legal avenue to delay it and having nothing to lose in taking Qantas Airways on, opining that it would succeed if legal and commercial reasons supported it, but that the environment in which it took place needed to be carefully considered, both in term of the impact on the timing of achieving it and current government and public attitudes. The advice noted that under the Qantas Airways enterprise agreement consultation was required on major decisions and that the agreement required the application of a protocol for pre-decision consultation and an IHB where Qantas Airways is considering outsourcing. The advice stated that the TWU will “undoubtedly use all these provisions to frustrate and attempt to delay the process”.
In a telephone conversation between one of the consultants and Mr Jones, he was told that the outsourcing proposal was high risk and the consultant was a proponent of reducing the risk, including by only partial downsizing.
In considering the evidence of the consultants’ advice, the primary judge’s strong impression was that an outsourcing option continued to be preferred in June 2020 by Mr David, Mr Jones and Mr Hughes, subject to detailed consideration of the sort of industrial risks identified by those consultants, and the legal risks for which expert advice was being sought from highly experienced industrial solicitors. His Honour noted that irrespective of any conditional preference to outsource of Mr David, Mr Jones and Mr Hughes, no decision could be made before the “IHB timeline risk” was managed and Qantas Airways had ensured, consistently with the warning given by the industrial consultants, that the TWU did not use the provisions requiring the IHB to frustrate and attempt to delay the outsourcing process.
After further consideration of the advice from the consultants, on 13 June 2020 Mr Hughes emailed to Mr David and Mr Jones a documents with a draft of Mr David’s talking points for the 15 June 2020 GMC meeting. That document was described by Mr David in an email the next day as “Excellent job. Read it thoroughly. Nothing I would change or add”, was in evidence and was substantially reproduced in the liability judgment. The document outlined the reason to consider a “full exit”, being outsourcing, and two alternative options. The document as reproduced included a description of financial benefits and industrial risks of outsourcing. The discussion of one of the other options referred to the risk of the two enterprise agreements being open simultaneously, which would concentrate power back in the TWU early in 2021, again referred to growing domestic demand back and Virgin Airlines being potentially on its feet. The primary judge said that the terms of this document fortified his Honour’s view that Messrs David, Jones and Hughes, who were at the GMC meeting, considered that a one-off and vanishing opportunity was being presented to adopt outsourcing and that operational risk would increase in 2021 in circumstances of open enterprise agreements.
A further draft of the document was sent by Mr Jones to Mr David on 14 June 2020, which was supplemented with more information under the heading “The timing”, reproduced by his Honour. The primary judge considered that this document was consistent with the views that Mr Jones held at that time that the operational consequences of the pandemic presented a limited opportunity to outsource, that the described necessity driven by COVID-19 provided a justification that could be deployed inside and outside Qantas Airways which would weaken over time and significant change in 2021 would not be likely for reasons that included the Qantas Airways enterprise agreement passing its nominal expiry date. His Honour regarded Mr Jones’ evidence in cross-examination on this document, reproducing transcript extracts, as a further example of his evidence being troubling. His Honour had no doubt that the most significant risk to operational disruption was because PIA may be able to be taken by employees and had no doubt that was one of the reasons in the mind of Mr Jones when he had formed and communicated the view that if outsourcing was to be done, it was best done quickly.
On 19 June 2020, a Qantas Airways board meeting was held at which discussion took place about the development of a three-year plan to guide the way through the pandemic to recovery. A slide show presentation, partially reproduced by his Honour, included an item headed “Industrial Risk Assessment”, with one item with a high-risk rating referring to “[b]elow the wing”, which stated:
TWU response to strategic review. Expected legal challenge and public brand campaign. Delays to in-house bid [IHB] process. QGS EA open. QAL [Qantas Airways] EA to open 1 January 21. PIA possible.
The Board meeting minutes, in recording a resolution that a Qantas Group three-year financial plan was approved, relevantly included a reference to the GMC and Mr Jones leading a detailed discussion on the manpower aspect of the proposed recovery plan. This was described as including details of the reduction of employee numbers, potential restructuring opportunities for below the wing ground operations, and identifying significant risks including potential industrial action, legal challenges, political consequences, and brand/reputational damage, and the management of those risks by a sub-group of GMC, reporting back to the Board.
Mr Jones’ 15 June 2020 speaking notes for that Board meeting, partially reproduced by his Honour, relevantly included a reference to a significant opportunity beyond rightsizing to drive fundamental transformation below the wing though outsourcing the entire function, describing that as a non-core part of the business, with there being many specialist companies performing this work, and 58 out of 68 ports having that arrangement. The speaking notes said that while a lot of clear “pros” were outlined, there were a number of “critical risks that need to [be] weighed up carefully before making a decision”, in context a reference to an outsourcing decision. The risks noted in the notes as reproduced by his Honour included in particular references to the TWU and to the current planning for a decision prior to 20 August, and what needed to be done before that, including the IHB process. The notes canvassed the alternative of a phased approach involving only Sydney international operations, describing that as a much longer term strategy and process given the lack of growth potential, and the “legacy EBA” with the TWU opening in early 2021 “significantly increasing the operational risks with any transitions”.
The primary judge noted two points. First, Qantas Airways rightly observed that it was important not to decontextualise what was occurring in relation to any option as to ground handling operation, noting that its affirmative case was that the outsourcing decision was made for the three imperative reasons, but the fulfilment of them was only a part of the much bigger picture of the recovery plan. His Honour did not regard it as “intuitively odd” that the Board and GMC would devolve responsibility not just for implementing such changes, but also deciding upon them, rejecting a contrary TWU submission. This observation went to the issue as to who the decision-maker was, with his Honour ultimately finding it to be Mr David.
Secondly, the primary judge noted, as his Honour found to be reflected in a portion of Mr Jones’s speaking notes, that he did not think that there was any doubt in the mind of Mr Jones, Mr David or Mr Hughes that there were clear “pros” of outsourcing the entirety of Qantas Airways ground handling function and that was to be preferred to rightsizing, that the attempt by Qantas Airways by reference to the evidence of Mr Jones and Mr Hughes to paint them as agnostic between those two options was entirely unpersuasive, and that it was no overstatement to remark that they were facing a business calamity. Provided it was feasible, they wished to implement the overall financial outcome best perceived to assist the recovery of a business under extreme pressure. This involved seeking and obtaining expert advice so that industrial and legal risks could eventually be weighed against the estimated rewards. That was consistent with the decision best facilitating the three commercial imperatives, provided it was open to do so. Messrs Jones, David and Hughes wanted to outsource ground operations because they believed it was best for the bottom line. Properly understood in the context of the rest of his Honour’s reasons, this was an acknowledgment of the benefit reasons for the outsourcing decision, but with the qualifications of feasibility, including countervailing risks. It would be a serious distortion of his Honour’s reasons to contend that these findings necessarily, or even realistically, precluded there being any other reason for the outsourcing decision. Yet, as considered below, that is a cornerstone of the Qantas argument for overturning the declaration.
In the period from 29 June to 11 August 2020, a detailed timeline was planned, and associated actions taken, contemplating a decision about outsourcing being made by the end of 2020, which included the key outstanding risks to be assessed. By those steps, the primary judge was satisfied that plans were well advanced for the announcement of the outsourcing proposal, with it appearing that on that date a two-hour GMC meeting was scheduled for 21 August 2020, with the invitation extended to the industrial consultants and the Qantas Airways executive manager for industrial relations. Those steps over that period included:
(a)a process which resulted in obtaining information from potential third-party suppliers of ground handling services, which included the potential industrial benefits when compared with the existing arrangements;
(b)a 5 August 2020 meeting of the GMC which included a presentation about a risk review which his Honour was confident accurately reflected the views of Messrs David, Jones and Hughes at that time and included the topic of industrial risks; and
(c)the 6 August 2020 preparation of a draft “Australian Airports Reforecast”, which referred to outsourced supplier costs and a delay in the below the wing option until December 2020, and legal and industrial risks, the content of which was heavily redacted for reflecting privilege claims, from which his Honour drew no adverse inference.
In the period from late August to mid-November 2020, the following occurred:
(a)on 19 August 2020, a Qantas Airways board meeting was held at which an announcement on 25 August of a strategic review of ground handling was noted;
(b)on 20 August 2020, Qantas Airways released its full year results for the 2019-2020 financial year, and a project restart steering committee meeting was held, with his Honour finding that by then it was time to put the outsourcing proposal in place; and
(c)on 24 or 25 August, Mr David executed a request for approval of a review of Australian Airports ramp, baggage and fleet presentations operations for Qantas Airways.
The TWU submitted to the primary judge that the request for approval process was designed to make it appear that Mr David was singularly responsible for the outsourcing decision and to disguise the role of the GMC. His Honour did not accept this, finding that it was clear that this process was a standard exercise regularly deployed to access funds and record decisions. His Honour found this was part of a formal and long process rather than a concoction, and the final step in putting in place a decision that was by that time inevitable given the evaluation of likely risks and rewards by Mr David and those reporting to him of proceeding with outsourcing. However, his Honour did not accept the suggestion that the practical decision to review the options was made at that time and not earlier. His Honour found that while the request for approval process might have been a standard procedure, this one was of importance and was prepared with extensive legal and industrial relations advice. His Honour found that what was happening was broadly consistent with Mr David’s oral evidence, and that he was happy to proceed and had reached this final view sometime after 5 August and before 24 August, with his Honour noting that he had already found that Mr David’s settled position for some time was that he was highly likely to proceed with the outsourcing proposal. His Honour concluded that the request for approval process was best seen as procedural step necessary to proceed with the strategic review (noted at the 19 August 2020 Board meeting).
On 25 August 2020, Qantas Airways notified affected employees of the decision to undertake the strategic review of ground handling, including details of the IHB process and an external request for proposal process with third party ground handlers and made a public announcement. A couple of days later there was a briefing session with the TWU. His Honour found that by the time of the instigation of the strategic review, after having received detailed expert advice about industrial and legal risks, and having weighed those risks, each of Messrs David, Jones and Hughes were of the view that a final outsourcing decision would be made, but this was subject to Qantas Airways having to go through the request for proposal and IHB processes. The rewards and benefits were by then well known to them, being annual cost savings of about $100 million when things returned to normal, ground operations would be provided only when an aircraft needed to be turned around and capital expenditure on ground equipment of $80 million over five years would not need to be expended. His Honour was satisfied that in their minds, the benefits were so significant as to outweigh the likely legal and industrial risks as explained to them, even though the experienced external industrial relations consultant was, at least initially, very concerned about the overall risks. His Honour also noted that although any savings from the counterfactual of not making that decision could not be identified until the IHB process had ended, given the significance of the savings he did not think that any of Messrs David, Jones or Hughes considered this was likely to be close, with eventual outsourcing being a “racing certainty”, or close to it. His Honour made that finding despite the evidence of Mr Jones and Mr Hughes being prepared to maintain an openness to the prospect and likelihood of comparable benefits emerging from the IHB process. His Honour regarded this as a good example of the artificial nature of their evidence, and of Mr David being “somewhat” more frank and realistic.
The primary judge observed that a vast bulk of evidence, expert and lay, was directed to the IHB process, but his Honour considered despite that it could be dealt with briefly, with most not needing to be referred to. Even the limited reference that his Honour made does not require reproduction as it does not assist on the issues presently before the Court. His Honour recorded but did not decide upon the TWU submission that this process was no more than a box-ticking exercise that Qantas had to go through before announcing its preferred outsourcing decision.
By early November 2020, Qantas Airways had effectively negotiated terms with external ground services providers and was in a position to engage them to do that work. By 18 November 2020, a request for approval for the awarding of contracts for ground operations across the 10 ports had been prepared to be sent by Mr David to the Qantas Group Chief Executive Officer, Mr Alan Joyce. A power of attorney from Mr Joyce to Mr David was said to be required because the net present value of the outsourcing contracts exceeded Mr David’s delegated authority. His Honour did not accept the impression sought to be conveyed by Qantas Airways that these two documents, the request for approval and the power of attorney, which he called the “David Approval Documents”, had emerged as a run of the mill exercise. Rather, his Honour found that the initial evidence of the Qantas Group General Counsel, Mr Andrew Finch, was inaccurate in so far as it was to the effect that the executive manager of industrial relations had unexpectedly approached him on 18 November 2020, when in fact contact had taken place before then. The circumstances in which the documents were prepared and finalised, the deficiencies in the IHB process, and the submissions by the TWU as to both, were considered in some detail by his Honour, but that detail is not presently relevant. What matters is that his Honour was not willing to find that they were an artifice or conducted otherwise than in good faith. His Honour found that the IHB was done because it had to be done, but there was never a realistic prospect of it being successful, his Honour already having noted that the IHB response by the TWU only offered savings of $100 million over five years, with more work to be done and the possibility of additional savings.
The primary judge described Qantas Airways’ affidavit evidence in chief on this topic as being carefully drafted to stress that the various bids failed to achieve any of the three commercial imperatives, and that this was said to be the basis upon which Mr Hughes recommended to Mr David that he decide to outsource the ground operations, and the reason why Mr Jones agreed with and endorsed that recommendation. His Honour described that as a tortured narrative, overcomplicating what actually happened, and that ever since the outsourcing proposal was first considered, each of those three men thought it was in the commercial interests of Qantas Airways and should be pursued provided the risks were not too great.
The primary judge considered competing submissions as to what should be made of the process and evidence in relation to the 18 November request for approval, the power of attorney, and the subsequent 26 November request for approval. His Honour accepted that they did make it appear that Mr David was the sole decision-maker and that Qantas Airways was intent on painting a picture that the outsourcing decision was a commercial decision made by one man by a commonplace and ordinary process, was conscious that the records were created to reflect this narrative, and other business records that might have been expected were not created, when specialist legal and industrial advice was being obtained. His Honour also accepted that the Qantas witnesses were careful not to depart from evidence they considered supported that case. However, his Honour did not consider that he was entitled to infer that the GMC endorsed or approved that decision, describing that as too speculative. His Honour did not accept the TWU’s contention that the GMC made the outsourcing decision, describing the argument as making too much of the evidence relied upon. Rather, the role of the GMC was to set broad strategic goals and parameters for the entire Qantas Group, including the recovery plan, be a senior forum for the exchange of information and providing feedback on risks and opportunities, being a role that was fulfilled. The primary responsibility for specific significant proposals being identified, considered and implemented was for senior managers after consultation with the GMC, which made sense having regard to the size and structure of the business and the apparent ambit of the responsibilities of the senior managers.
The 26 November 2020 request for approval and a presentation were sent to Mr David and the next day he signed it. The primary judge was satisfied that although since at least August the outsourcing decision was very highly likely to be made, it was Mr David who was ultimately responsible for making it. On 29 November 2020, the Qantas Board was provided with a memorandum about the outsourcing decision, and on 30 November Qantas Airways announced it had rejected the in-house bid and had determined to outsource its ground services operations to external third party providers. His Honour reproduced a substantial part of the communication from Mr David to employees.
In late January 2021, Qantas Airways entered into ground handling agreements with third-party providers, and on or before 31 March 2021 all relevant affected Qantas employees ceased employment in that role.
Having made the above findings, the primary judge considered the following competing submissions and made the following findings on the outsourcing decision. Qantas Airways submitted that the TWU case was an artificial construct, seeking to “throw a blanket” over all the events and then conduct a roving search for what might have been exercising the minds of the various Qantas Airways managers, so as to assert that any and all of those things should be regarded as substantial and operative reasons for the outsourcing decision. Qantas Airways contended that while Mr David kept a close eye on implementation risks, his immediate and operative reasons were the three commercial imperatives, being the only things referred to in the comparative assessments by Mr Nicholas and Mr Hughes, the recommendation of Mr Jones and the only subject matter of the final request for approval and accompanying support pack. His Honour observed that, given the attention given to the critical documents, including by industrial relations lawyers with eyes attuned to protecting the imminent decision from attack, it would have been remarkable for there to have been reference to anything other than the three commercial imperatives.
The primary judge was satisfied that Mr David’s evidence as to the reasons for embarking upon the outsourcing proposal being the three imperatives was substantially correct, but was not satisfied that those objectives, expressed at a level of generality, meant that Mr David was not subjectively conscious of other considerations that were not inconsistent with those objectives. His Honour had reservations about Mr David’s denial that his reason for the decision to outsource was to avoid Qantas Airways being in a position where it needed to bargain with and negotiate with the TWU in the future. A part of the reason for this uncertainty was that his Honour rejected the similar but unconvincing evidence of Mr Jones that no part of his reasons for recommending the outsourcing decision be made was to prevent employees from disrupting services in 2021 by taking PIA when it was hoped that services might be getting back to normal.
The primary judge considered the evidence about the different view that Mr Jones and Mr Hughes had about the likely amenity of the Australian Services Union (ASU) for “above the wing” customer service staff, compared to the TWU. His Honour found that it was plain that Mr Jones and Mr Hughes believed that one could do business with the ASU, but the TWU was in a different category. However, his Honour did not accept a TWU submission that this pointed to a factor motivating the involvement in promoting the outsourcing decision.
The primary judge found no suggestion in the evidence that Mr David, Mr Jones or Mr Hughes had any different views about the risks and rewards of outsourcing, and the apparent consensus between them weighed in favour of a conclusion that Mr David had similar views to Mr Jones and Mr Hughes as to when and why outsourcing should occur. His Honour formed that view notwithstanding that he accepted that the three imperatives were objectively cogent commercial reasons for the outsourcing decision, this was not incompatible with another, complementary reason. The key concern of making the outsourcing decision on 30 November 2020 was because of the vanishing window of opportunity, with the operational disruptions occasioned by the pandemic meaning that the risk/reward analysis previously preventing outsourcing being considered a viable option became viable for a limited period.
The primary judge found that the existence of the open enterprise agreements was a further factor, at least in the mind of Mr Jones, who perceived a need for the outsourcing decision to be made prior to Qantas Airways being presented with the prospect that the industrial backlash could have included PIA. The primary judge was satisfied that this factor was part of Mr Jones’ reasoning processes in making his assessment of the other two options and his endorsement of the recommendation to Mr David. However, his Honour was less certain of the subjective decision-making processes of Mr David as the decision-maker. It is clear, therefore, that in the absence of the presumption in s 361(1), the TWU’s case under s 340(1)(b) would have failed because his Honour found that the positive evidence in relation to the state of mind of Mr David fell short of what was required for that purpose.
The primary judge considered the nature of the TWU adverse action claim, and the relevant statute and case law, including in particular the terms of and case law in relation to ss 360 and 361(1) and the conclusion that the operation of the rebuttable presumption of a proscribed reason for the outsourcing decision. There is no suggestion of error in that consideration. The case law in that regard is set out below at [143], as recently summarised in Alam v National Australia Bank Ltd [2021] FCAFC 178; 310 IR 71; 393 ALR 629 at [12]-[14] per White, O’Callaghan and Colvin JJ. His Honour then turned to the determination of whether Qantas Airways had established that, on the balance of probabilities, the action constituted by the outsourcing decision was not taken for reasons which included a prohibited reason. His Honour correctly observed that this question was to be answered by reference to his findings on all of the relevant evidence, noting that s 361(1) did not impose upon Qantas Airways any onus to call any and every piece of evidence that might arguably influence the answer, citing Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157; 238 FCR 273 at [27] per Jessup J.
The primary judge then observed that s 340 and other provisions were directed to the state of mind of “a person”, calling for an inquiry into the mental processes of the person responsible for the action – here the outsourcing decision – citing Board of Bendigo Regional Institute of Technical and Further Education v Barclay[2012] HCA 32; 248 CLR 500 at [140]. His Honour observed that this inquiry can be straightforward, but in other cases can be complex even where there is a single decision-maker. In this case, this raised the issue of corporate decision-making, and the related issues of involvement in, contribution to, influence upon, or a material effect upon, such a decision. His Honour’s consideration of authority on this topic is addressed in considering ground 4 in the Qantas appeal, and the TWU notice of contention in relation to that appeal. It suffices at this point to note that his Honour rejected a TWU submission to the effect that in order to discharge the onus in s 361(1), Qantas Airways was required to lead evidence of the reasons and purpose of every person who was involved in and contributed to the ultimate decision by Mr David. His Honour accepted Qantas Airways’ submission that the analysis of ss 340 and 346 was a causal inquiry of the reasons of the decision-maker at the time any adverse action was taken.
The primary judge found that the TWU’s s 346(a) adverse action case was not made out because his Honour was not satisfied that union membership per se was more than a consideration that was factored into the making of the outsourcing decision, and that this did not rise to the level of being a reason for making that decision. His Honour was satisfied that the outsourcing decision made by Mr David on 30 November 2020 became inevitable because an assessment was made that the manifest commercial benefits outweighed the risks. The financial crisis and the operational disruption caused by the pandemic meant that the industrial and reputational risks were far less significant than would otherwise have been the case. However, while his Honour accepted that pure financial interests were at the forefront, he did not accept that this was not in fact decided until the eleventh hour, as Qantas Airways urged. His Honour concluded that he was satisfied on the balance of probabilities that the fact that affected employees were members of the TWU was not of itself a substantial and operative reason for deciding to make the outsourcing decision.
In relation to the TWU’s s 340 adverse action case, the primary judge was satisfied that the primary case based on preventing the exercise of workplace rights was made out, but that the case concerning the entitlement to the benefits of enterprise agreements was not made out. As that second decision is not challenged, it is only necessary to address the primary case, which was the only proscribed reason that his Honour found that Qantas Airways had not disproved in discharge of the onus in s 361(1).
In order to understand the conclusion the primary judge reached, it is illuminating first to address briefly how his Honour characterised the TWU case as argued in closing submissions, the Qantas Airways arguments to the contrary, and his Honour’s consideration of those arguments. The thrust of the TWU case was that one of the reasons for the outsourcing decision was that 2020 presented a unique opportunity because of low flying levels associated with the pandemic and affected employees at that time having no ability to initiate or participate in the process of a protected action ballot (s 341(2)(d)) or the process of organising and engaging in PIA (s 341(2)(c)). The final TWU argument was that the Australian Airports business team were aware that the Qantas Airways enterprise agreement would pass its nominal expiry date on 31 December 2020 and would then be “open”, which meant being exposed to the possibility of PIA in 2021, the Qantas Airways records proved awareness and sensitivity to this and that this was brought into account in assessing the positives and negatives of various options, and that this became part of the reasoning process for evaluating the options and deciding which to proceed with, which made them a substantial and operative reason for the outsourcing decision.
Qantas Airways submitted that certain difficulties arose from the TWU argument, aspects of which the primary judge described as inconsistent with the findings:
(a)that Mr David’s reasons for making the outsourcing decision on 30 November 2020 were the same as he had for embarking upon the outsourcing proposal in August 2020, being substantially the so-called three imperatives, but that this did not mean that Mr David was not subjectively conscious of other considerations, not inconsistent with the three imperatives;
(b)that his Honour was satisfied that part of Mr Jones’ reasons for recommendation to Mr David to make the outsourcing decision was to prevent affected employees disrupting services in 2021 by taking PIA when it was hoped services might be getting back to usual and the key concern within the Australian Airports business team in making the outsourcing decision when it was made because of the vanishing window of opportunity caused by the operational disruption, with his Honour further noting in relation to Mr Jones, that he was satisfied that the existence of the open enterprise agreements was a consideration; and
(c)that his Honour was not satisfied there was any difference between Mr David and Messrs Jones and Hughes in the way they thought about the proposed differences in approach between above the wing and below the wing workforces or any different views as to the risks and rewards of outsourcing.
The primary judge enumerated and addressed Qantas Airways’ arguments in response to the TWU case summarised above as follows:
(1)Qantas Airways submitted that the evidence established that an open Qantas Airways enterprise agreement and the possibility of protected industrial action was always viewed as an implementation risk of outsourcing which was likely to be a greater risk in 2021 than in 2020, but this was distinct from the reasons for making the decision and it was wrong to elevate such a risk assessment into a reason.
His Honour’s response was that the relative risk assessment for implementation in 2020 compared to any future opportunity was central to the view collectively held by the Australian Airports business team as to why there was a vanishing window of opportunity to outsource, and further that he was satisfied that Mr Jones factored as an important component of his risk assessment that the outsourcing decision should be taken at that particular time to prevent affected employees disrupting services in 2021 by taking PIA.
(2)Qantas Airways submitted that the TWU argument wrongly assumed it was not exposed to PIA until at least some time in 2021 because QGS employees could, after following the necessary protected action ballot procedure, organise and take protected industrial action at any relevant time in 2020, exposing it to PIA by about 63% of the relevant cohort of ground operations employees at all relevant times in 2020 and beyond.
His Honour accepted that this was so, but this was not to the point, reasoning that apart from the obvious fact that no industrial action would have been a particularly effective when planes were not flying, the real concern was to avoid the risk of the two enterprise agreements being open at the same time so that any PIA could involve both workforces and may occur when the planes were able to fly again normally.
(3)Qantas Airways submitted that there was no documentary consideration of any timing risk of open enterprise agreements or PIA in 2021 until Mr Jones’ speaking notes for the 19 June 2020 GMC meeting, which did not indicate apprehension about the TWU realising an industrial opportunity, the Voice-over annotation from about 20 May 2020 had been contorted, and there was no evidence that Mr Jones presented on these notes to any other meeting, nor any evidence that Mr David ever saw these notes. Afterwards, exposure to PIA received very limited specific attention, referring to the Board pack and Board Notes and although the relevant Qantas Airways witnesses were aware of these matters and conscious of the increased implementation risks in 2021 and their causes, this was relevant only to operational continuity risk.
His Honour’s response is that he had found that there was consideration of a timing risk of open enterprise agreements as early as May and was satisfied that Mr Jones believed, at all material times, that operational risk would increase in 2021 in circumstances of open enterprise agreements and power being concentrated back in the TWU.
(4)Qantas Airways submitted that, apart from the TWU not fairly characterising its business records, aspects of the timeline of events was against its argument, including that a target date was set for the end of any request for proposal or IHB process as the end of 2020, and there could have been a delay to that timeline into the early months of 2021 so that Qantas Airways would not be implementing any outsourcing proposal until 2021, at a time when both enterprise agreements would be open and both entities would be vulnerable to PIA.
His Honour considered that the fact that on a worst-case scenario the outsourcing decision could conceivably be delayed was of no moment, because it was manifest that if a decision was to be made, the collective view within the Australian Airports team was that it should be made swiftly, with the window perceived to be finite. This involved management of the “so-called” IHB timeline. His Honour observed that while timelines for the process of decision-making undoubtedly contemplated delay if, as the industrial relations consultant had warned, the TWU opportunistically used provision for the IHB to frustrate and attempt to delay the process, there was no doubt the aim was to make the outsourcing decision as soon as it could be made, subject to proper assessment of the risks and effective management of the IHB process.
(5)Qantas Airways submitted that the TWU’s argument had a more fundamental difficulty in that the relevant factor or consideration at the time of both the outsourcing proposal and the outsourcing decision, was that operational risk was low because of limited flying and staff stand downs and because the employees did not have any entitlement to bargain or take PIA. It went beyond the scope of the word “prevent” in s 340(1)(b) and its legislative purpose to suggest that any aspect of Qantas Airways’ reasoning was to prevent a possible future exercise of rights to bargain and take protected industrial action, which might only arise if the actual decision were to be made at some later point in time when there were greater flying activity. Thus Qantas Airways argued that the outsourcing decision did not prevent anything and the TWU could not point to any direct or immediate thing that was prevented by the outsourcing decision.
His Honour described this submission as misconceived, reasoning that the TWU was correct to submit that the insertion of a requirement that the prevention of the exercise of the workplace right be direct or immediate was a gloss on the words of s 340(1)(b). Rather, the provision directs attention to whether adverse action has been taken “to prevent” the exercise of a workplace right, and there was no basis for adding a requirement that the right be of a particular nature such that it can be characterised and assessed to be sufficiently immediate. His Honour further observed that in any event the outsourcing decision prevented the members of the TWU who were affected employees exercising their workplace right to do something that Qantas Airways did not want to occur and wished to prevent, that is, participation in PIA. His Honour said s 340(1)(b) contemplates acts to prevent employees exercising workplace rights by preventing circumstances arising whereby those rights could be exercised.
(6)Qantas Airways submitted as a particular illustration of a more general Browne v Dunn complaint that it was never put to Mr David, squarely, in terms or at all, that when he came to make either the outsourcing proposal decision or the outsourcing decision that particular considerations or risks attending the other options considered in June 2020, were present to his mind, or that they were amongst his substantial and operative reasons for making the decisions he did, in August and then in November 2020, nor were such matters ever put to the other relevant witnesses. Qantas Airways submitted that much of the cross-examination on this topic was entirely hypothetical and framed as questions of basic logic in the sense of cause and effect, rather than going into the actual reasoning process employed by the witnesses themselves.
His Honour said that this complaint went nowhere, because, irrespective of the criticisms of the cross-examination, the three centrally important witnesses were cross-examined, often at very considerable length, by reference to documents they had prepared or approved that outsourcing occur in 2020 because of the risk of employees being in a position to bargain and take protected industrial action in 2021. His Honour accepted the TWU’s submission that the proposition that Qantas Airways, and those managers who gave evidence, wanted to prevent its ground handling employees being in a position to bargain and to take protected industrial action, was squarely put.
(7)Qantas Airways submitted that even if the Court were to conclude that there was a desire to avoid the consequences for operational continuity of enterprise bargaining and PIA, a multitude of factors are likely to come into the mind of a decision-maker when assessing various options and their risks, before going on to significant decisions at later points in time. Qantas Airways submitted that it was not unusual that oral and documentary evidence shows an extensive and detailed consideration of various risks associated with evaluating various options and later the implementation risks associated with one of those options, being the outsourcing of ground operations.
His Honour said Qantas Airways was correct to stress that it was to be expected that the evidence would show extensive and detailed consideration of various “risks” associated with the evaluation of various options and later the implementation risks associated with one of those options, and that it can be relevant that a decision-maker was aware of a risk and gave consideration to it, but this did not mean that the identification of risk means an action was taken for a particular reason. His Honour said this was why the TWU’s submission that the Court can make something significant of the fact that specialist industrial relations legal advice was obtained was misconceived. His Honour said it would have been contrary to common sense if such advice was not obtained. Such advice might be relevant to understand or give weight to representations in documents settled or passed by lawyers, but to draw some adverse inference simply because advice on a certain topic was received would be contrary to principle.
(8)Qantas Airways submitted that each of Messrs David, Jones, Hughes and Nicholas only ever considered open enterprise agreements and PIA, as relevant to an assessment of operational continuity risk at a different future point in time and there was no evidentiary foundation for a finding that any part of their reasoning process was directed towards enterprise bargaining or PIA per se. His Honour described how this argument was developed by quoting from Qantas Airways’ submissions to the effect that enterprise bargaining and the frequent availability of PIA were a feature of life at Qantas Airways, but PIA never arose as a consideration in relation to the outsourcing decision because it did not give rise to an operational continuity risk, as opposed to an implementation risk. Qantas Airways submitted that it was principally the risk PIA might pose to operational continuity, including in particular if a decision were to be deferred to a future date, that was considered, not the mere fact of the protected action itself.
His Honour accepted that it was unsurprising that the risk PIA might pose to operational continuity would be considered, and that the identification of such a risk does not mean that the prevention of the risk occurring in the future somehow becomes a reason for a decision which would mean the risk would not eventuate, with the focus being on the mind of the decision-maker. However, the relevance of the fact that the relevant risk was identified and discussed was rationally relevant to the assessment of whether Qantas Airways had established that the prevention of that risk eventuating via the workplace right being exercised in the future was not a reason why the outsourcing decision was made in November 2020.
The TWU also submits that if the primary judge was not satisfied that he could determine whether reinstatement was appropriate in the absence of an assessment of compensation, it was incumbent upon him to raise this and defer determination of the question of reinstatement as he had indicated he would.
Qantas submits that in assessing what orders were appropriate, the primary judge was entitled to consider the drawbacks of an individual opt-out mechanism, including that in assessing whether to opt-out, the affected employees would not have clarity on the alternative remedy of compensation.
The TWU had sought that its claim for reinstatement orders be separated from and determined prior to its claims for compensation and penalties. On 1 October 2021, the primary judge delivered reasons in the case management judgment for acceding to the TWU’s position. His Honour ordered that, relevantly:
…the question of whether the applicant is entitled to any relief identified in the Points of Claim document filed on 25 August 2021 at prayers [1]–[5], be determined separately and prior to any other claim for relief in the proceeding (Reinstatement Hearing), subject to any further order at the conclusion of the Reinstatement Hearing.
The orders sought at [1]–[5] of the points of claim were orders for reinstatement of the affected employees and incidental orders.
In the case management judgment, the primary judge observed at [41] that the order was made subject to further order, “in case I form the view during the course of the hearing that the benefits of bifurcation did, in fact, prove to be illusory…”.
As has been mentioned, the principal order sought by the TWU was that Qantas reinstate the affected employees, “who do not elect by notice in writing to Qantas within 14 days of these orders not to take up reinstatement”. The primary judge took into account (at RJ [148]) that, “[a]n individual opt-out mechanism is somewhat problematical absent clarity as to the quantum of the alternative compensation remedy or the specific basis of its calculation”.
The TWU’s submission that the parties conducted the hearing before the primary judge, on the basis that, “the only question was whether global reinstatement was an appropriate order”, cannot be accepted. The order made on 1 October 2021 was that determination of whether the reinstatement orders and incidental orders the TWU sought should be made separately and prior to any other claim for relief. As has been discussed, that did not simply involve the question of whether reinstatement was “an appropriate order”, but also involved determining whether reinstatement plus compensation for past economic loss was a more appropriate order than an order for compensation for past and future economic loss.
In assessing whether the reinstatement order sought by the TWU was the more appropriate order, it was relevant for his Honour to consider the consequences of making such an order, including difficulties or uncertainties attending the opt-out mechanism proposed by the TWU. One of the difficulties identified by his Honour was the lack of information available to the affected employees concerning the quantum of compensation when making an election as to whether to opt-out (at RJ [142]). Contrary to the TWU’s submission, that was not an irrelevant factor.
The TWU also submits that if the primary judge was not satisfied he could determine whether reinstatement was appropriate in the absence of an assessment of compensation, his Honour should have raised this or deferred determining the question of reinstatement as he had indicated he would. However, since his Honour proceeded to refuse to make a reinstatement order, he was evidently satisfied that he could determine whether reinstatement was the more appropriate remedy in the absence of an assessment of compensation. His Honour had made the order for separation subject to further order in case he formed the view that the benefits of bifurcation proved to be illusory. His Honour was evidently satisfied that the benefits were not illusory. Further, the TWU seems to suggest that his Honour was obliged to provide some kind of preliminary indication of his inclination to not order reinstatement. However, nothing said by his Honour in the case management judgment was capable of giving rise to any such obligation.
Ground 4(a) must be rejected.
Ground 4(b)–(c): The affected employees would be reinstated to little or no work
Grounds 4(b)–(c) of the notice of appeal allege that the primary judge erred:
b.by mistaking the facts in concluding that there may be little or no work for reinstated employees to do after reinstatement were ordered for a significant period of time;
c.in the alternative to (b), by taking into account that there would be little or no work for reinstated [employees] to do after reinstatement were ordered.
The primary judge found (at RJ [148]) that if reinstated, the affected employees would realise that during the first months after reinstatement they would be paid while not being required to work and would have no or little work to do for a significant period. The TWU submits that his Honour failed to make findings as to how long it would take for Qantas Airways to re-establish its ground handling function. It submits that there was no basis, other than speculation, for these conclusions.
The TWU submits that before the primary judge, it accepted that some period of time would elapse between an order for reinstatement being made and Qantas Airways being required to effect reinstatement. It contended for a period of one month, whereas the respondents contended for a period of many more months. The TWU argues that there was no reason why the reinstatement order would need to operate forthwith and that neither party suggested it should. The TWU submits that in these circumstances, the primary judge was required to assess how long it would actually take for Qantas Airways to re-establish its ground handling business such that employees could be reinstated into their previous jobs and provided with work. The TWU submits that any order was contemplated to operate from the expiry of that time. The TWU submits that in finding that the affected employees would be reinstated to no work for a period of potentially many months, his Honour misunderstood the appellant’s case.
The primary judge found at RJ [148]:
The proposal of the Union is that outsourced employees would come to realise that during the first months after reinstatement they would likely receive wages while not being required to work. As such, the reinstated employees may have no or little work to do for a significant period after reinstatement, while receiving full pay.
The global reinstatement order sought by the TWU was that Qantas:
… reinstate employees … who do not elect by notice in writing to Qantas within 14 days of these orders not to take up reinstatement … to the positions they held immediately prior to the cessation of their employment by no later than 28 days of these orders being made.
That order, understood by reference to Blackadder at [14], [32], [43] and [76], would require Qantas to re-employ those affected employees who did not opt-out in their former positions and provide them with actual work to do within 28 days of the order being made. That was quite impossible given that Qantas Airways’ ground operations function had to be recreated, requiring at least the steps which the parties had specified in the amended statement of agreed facts to be undertaken.
The TWU’s written submissions before the primary judge stated:
30.The TWU accepts that some period of time should elapse between an order for reinstatement being made and Qantas being required to effect reinstatement. However, the reasons for a 6-month period apparently to be sought by Qantas are not clear and appear exaggerated …
31.The TWU’s position is that a reinstatement order should be made effective no more than 1 month after a reinstatement order is made …
The expressions “effect reinstatement” and “made effective” refer, on their face, to the reemployment of affected employees in their former positions and the provision of actual work. That was consistent with the terms of the reinstatement order sought by the TWU.
The evidence of Mr Hughes was that the process of recreating the business function would take at least 28 weeks (the six month period referred to in the TWU’s submissions) and that the reinstated employees would have little or no work to do in that time. His Honour (at RJ [75]) accepted that evidence, and accordingly, rejected the TWU’s submissions set out above.
The primary judge’s referred (at RJ [148]) to “the reinstated employees” on the assumed basis of the reinstatement order sought by the TWU being made. His Honour was referring there to hypothetical affected employees who had not elected to opt-out and who had been reemployed and were being paid wages, but who had not yet been provided with actual work. His Honour’s finding (at RJ [148]) that such employees would not be provided with actual work for “months”, or “a significant period”, was consistent with acceptance of the evidence of Mr Hughes (at RJ [75]) that the period would be at least six months. Contrary to the TWU’s submission, the primary judge did make findings as to how long it would take for Qantas Airways to re-establish its ground handling business, and those findings were available on the evidence.
The TWU also seems to contend that in the paragraphs of its written submissions cited above, it was seeking an order that would not require the affected employees to be reemployed until Qantas’ ground handling business had been recreated and there was actual work available for the employees. That retrospective construction is quite inconsistent with the terms of the reinstatement order sought and the language of the TWU’s submissions. The primary judge did not misunderstand those submissions.
Grounds 4(b) and (c) must be rejected.
Ground 5: Perceived difficulties in compliance and future disputation
Ground 5 of the notice of appeal states that the learned primary judge erred:
a.by mistaking the facts that there would be uncertainty as to what the first respondent would be required to do in reinstating its ground handling business, when the parties had agreed at [13]-[17A] to the Agreed Statement of Facts what the first respondent would need to do in order to comply with a reinstatement order;
b.by concluding that compliance with a reinstatement order would require determination of disputes in relation to the commercial terms and level of rent of airport premises, commercial terms the first respondent would be required to agree with third party contractors, the commercial terms and prices the first respondent should pay for ground services equipment or the parameters on the first respondent in terms of raising additional funds to re-create and operate ground handling operations;
c.by concluding, in the absence of evidence, that there would be ongoing disputation if a reinstatement order were made.
The primary judge found (at RJ [149]) that, “any global reinstatement order is likely to produce real uncertainty and ongoing disputation”. The TWU submits there was no uncertainty as to what would be required by a reinstatement order since the amended agreed statement of facts detailed what the substantial recreation of the ground handling business would entail. The TWU submits that to the extent the primary judge concluded that there was “real uncertainty” about what was required of Qantas Airways in complying with the reinstatement order, his Honour mistook the facts.
The TWU also submits that Qantas Airways failed to lead evidence about the difficulties that would, in actuality, be encountered in doing the things necessary to recreate the business. In particular, Qantas Airways adduced no evidence that: there would be any difficulty in purchasing ground services equipment; or that maintenance engineers and workforce planners were unavailable or would be difficult to recruit; or that there would be difficulties recreating the pre-existing management structure; or that lease space was unavailable, or airport authorities would be unwilling to enter into leases, or would insist on unpalatable or onerous terms; or that there would be actual difficulties in engaging ground handling companies in any integrated ground operations model; or that Qantas Airways would encounter difficulties raising requisite capital. The primary judge’s conclusion that an order would produce uncertainty is submitted to be without any evidentiary foundation and speculative. The TWU submits that, in any event, all that the reinstatement order required was that the respondent restore the affected employees to their former positions and provide actual work for them to perform. Assessment of compliance with the reinstatement order sought would not require adjudication of the type of issues identified by the primary judge.
Qantas submits that the steps required to recreate the business set out in the amended statement of agreed facts were expressly stated to be non-exhaustive and were expressed at a high level of generality. Further, the document recorded that many of the steps required to be taken were dependent on the actions of third parties. The oral evidence identified a number of difficulties in negotiating commercial terms that Qantas Airways would have faced if a reinstatement order were made. In those circumstances, the primary judge was correct to conclude that the bare order sought by the TWU was, “likely to produce real uncertainty and ongoing disputation”. Qantas submits that an order for reinstatement is in the nature of a mandatory injunction and what the employer must do must be clear. Qantas also submits that there is a complete lack of commercial reality in the TWU’s submission that the primary judge could not conclude that it was “not difficult to foresee” disputes in negotiating the terms of airport leases, agreements with ground handling companies, and prices for ground servicing equipment and capital raising.
The primary judge found, relevantly:
[149]Thirdly, and at some risk of understatement, I consider that any global reinstatement order is likely to produce real uncertainty and ongoing disputation. As Qantas and QGS correctly submit, it is not difficult to foresee disputes over matters including: (a) what commercial terms and what level of rent demanded by the (monopoly) lessor of each of the 10 ports should Qantas be required to accept (assuming that such space to rent is available); (b) what commercial terms should Qantas be forced to accept with each of the nine contractors in renegotiating each of the 20 commercial contracts with them for the purpose of facilitating any likely dual ground handling model; (c) what commercial terms and at which prices should Qantas pay the contractors for the GSE; and (d) what parameters should be imposed on Qantas in terms of raising the additional funds required to re-create and operate ground handling as before (including the necessary capital expenditure to allow the business to be run).
[150]I should note that despite what I have said and its significance, reliance on the third point as a discretionary factor against making a re-instatement order causes me some perturbation. Problems with enforcement are likely to arise even if there was a measure of goodwill and co-operation between the parties. But as was foreshadowed by Qantas and QGS in final submissions, ensuring compliance when so many variables are in play (and in circumstances where the parties are at loggerheads) will, I suspect, be like presiding over the litigation equivalent of the Battle of the Somme. I am conscious that Qantas and QGS should not, in effect, be “rewarded” for creating any problems with ongoing supervision and enforcement, but they are entitled to rely on their legal rights and one cannot ignore that any reinstatement regime as would be required in this singular set of circumstances is likely to cause ongoing problems.
It is apparent that the primary judge considered that simply making the order for reinstatement in the simple form sought by the TWU would be inadequate. Although his Honour considered (at RJ [147]) that this was, “not a case where reinstatement orders would be futile because compliance would not be possible”, his Honour plainly recognised that there was some risk that the order might not ultimately be able to be complied with, or that difficulties might arise in complying with the order within a reasonable time. The amended statement of agreed facts set out a number of steps that Qantas Airways would need to take in order to recreate its ground handling business across ten airports. It was not an agreed fact that Qantas Airways would be able to take all of the necessary steps. In fact, the parties expressly agreed that many of the steps, “are not within the current control of Qantas [Airways]”, acknowledging the possibility that not all the steps would necessarily be able to be undertaken. The descriptions of necessary steps were littered with assumptions and uncertainties. For example, it was agreed that Qantas Airways would be required to seek to make arrangements, “to re-lease (if possible) Qantas [Airways] terminal and airside spaces…”. The parties agreed that, “on the assumption they were available in the market”, Qantas Airways would be required to recruit, train and employ workforce planners. Qantas Airways would also be required to recruit sufficient numbers of ground operations executive managers and maintenance engineers. In addition, the parties expressly agreed that the necessary steps included, but were “not limited to” those set out.
Mr Hughes gave evidence that Qantas Airways would need to employ approximately 2000 staff in total. Many of those staff would need to be recruited (and it must be remembered that it was uncertain how many of the affected employees would elect for reinstatement). All would have to be trained or retrained. He gave evidence that there would be significant lead times involved in acquiring new equipment or reacquiring equipment that had been sold to contractors. Mr Hughes’ evidence was that negotiations with airport corporations as monopoly lessors are challenging and difficult.
The parties agreed that for the 2020/2021 Financial Year, Qantas Airways had made an underlying before tax loss of approximately $1.8 billion. The amended statement of agreed facts expressly and inferentially described the high cost of taking the necessary steps, including buying back equipment, upgrading equipment, recruiting additional employees, the cost of leases and damages for the termination of contracts.
In these circumstances, the primary judge considered that it would not be appropriate to simply make a global reinstatement order in the form contended for by the TWU with the attendant risk that Qantas Airways may not be able to comply, or comply within a reasonable time. His Honour envisaged that if an order for reinstatement were made, it would include a supervisory role for the Court. As to an order in the form sought by the TWU, his Honour found (at RJ [152]), “in the complex circumstances of this case, an order cast in such general terms would be both hopelessly ambiguous and require constant supervision”. The TWU has not directly asserted that this finding is wrong, nor has sought to provide any explanation for why it may be wrong.
In that context, the primary judge considered (at RJ [149]) that any global reinstatement order was, “likely to produce real uncertainty and ongoing disputation”. The amended statement of agreed facts and Mr Hughes’ evidence identified a number of uncertainties and potential difficulties in recreating the business. It was open to his Honour to find (at RJ [149]) that, “it is not difficult to foresee disputes”, concerning the matters that his Honour described. It was open to find that the likelihood of uncertainty and disputation in complying with the orders made was a matter mitigating against a global reinstatement order.
There was no error made by his Honour in making the findings complained of under Ground 5. Ground 5 must be rejected.
Ground 6: Qantas’ intention to again retrench employees if reinstated
Ground 6 of the notice of appeal asserts that the primary judge erred:
a.by mistaking the facts in concluding that the first respondent would move to retrench reinstated employees as soon as possible in circumstances where:
(i)Mr Colin Hughes gave evidence that this would not necessarily occur if the first respondent had to re-create its ground handling business as a component of a reinstatement order and where no evidence had been adduced from Mr Andrew David that retrenchment would be pursued if the first respondent had to re-create its ground handling business as a component of a reinstatement order;
(ii)Mr Hughes and Mr David’s evidence was that retrenchment would be pursued immediately if the first respondent was not required to reinstate its ground handling operations;
(iii)the learned primary judge correctly concluded at [RJ] [157] that making a reinstatement order would require the first respondent to take steps to ensure reinstated employees were given back their jobs;
b.by taking into account that the first respondent’s subjective intention was to proceed to retrench reinstated employees as soon as it legally could;
c.by failing to give any weight to the fact that the respondent had decided to outsource the Affected Employees in the ‘window of opportunity’ in 2020 when ground handling employees were largely stood down and domestic and international flying was significantly diminished and that opportunity no longer existed.
The primary judge found that if the affected employees were reinstated, Qantas Airways would, as soon as it was legally possible, retrench them (at RJ [151] and [157]). The TWU submits that neither Mr Hughes nor Mr David gave evidence that if a reinstatement order was made (which would require Qantas Airways to put back in place the affected employees by recreating its ground handling operations), Qantas Airways would move to retrench them as soon as legally possible. The TWU contends that this mistake of fact was on a material matter that vitiated the exercise of the discretion.
The TWU submits, in the alternative, that if Qantas Airways asserted a present intention to terminate unlawfully dismissed employees again if reinstatement were ordered, that was irrelevant to the consideration of whether reinstatement was appropriate. It is submitted that the present intention of a contravener as to how they may act after complying with an order for reinstatement is irrelevant to the fashioning of a remedial response geared to addressing or remedying a contravention that leads to termination, and cannot rationally bear on the appropriateness of a reinstatement order.
The TWU submits that even if it were relevant to consider Qantas Airways’ subjective intention, the primary judge failed to weigh and take into account the “window of opportunity” presented in 2020. This window is said to have been created by the low operational risks of outsourcing, arising from minimal air travel; the legal inability on the part of Qantas Airways employees to take protected industrial action, and the practical inability of QGS employees to take protected industrial action of any significance; and the political and governmental context presented by the pandemic in 2020. The TWU asserts that this window closed in 2020.
Qantas submits that the primary judge did not mistake the evidence, and that it was open to infer that if the affected employees were reinstated, Qantas Airways would, as soon as was legally possible, retrench them. Qantas submits that it was not irrelevant to consider the practical utility of making a reinstatement order. It is submitted that the TWU’s submission about the “window of opportunity” is really a complaint about weight and, in any event, there is no finding that Qantas Airways’ opportunity to outsource had passed after 2020, and, indeed, the findings are directly to the contrary.
The primary judge found, relevantly:
[151]When one considers all of the above, the conclusion that a global reinstalment order is not an appropriate order to make in all the circumstances is not attended by any doubt. This is reinforced (but not dependent upon) the fact that if the outsourced employees were reinstated, Qantas [Airways] would retrench them as soon as is practicable to do so, as explained below.
[152]The above analysis has already dealt sufficiently with many of the issues raised by the Union … but it is appropriate, at the risk of repetition, to make the following additional points:
…
(2)… It is not surprising that absent compulsion and subsequent close supervision (to the extent such supervision is practicable), the steps necessary to implement reinstatement will not happen. This is so plain that Mr David has already made what amounts to a decision to sack any outsourced employees if they are reinstated... Any “appropriate” remedy must reflect the reality that Qantas [Airways] will do no more than is necessary to comply with any Court orders.
…
(6)Although there may be growing momentum around recovery, it is agreed that flying activity has dramatically decreased, there have been ongoing stand downs of employees and Qantas [Airways] continues to face serious financial and operational difficulties as a result of the ongoing pandemic, including uncertainty associated with the level of flying activity.
…
[154]Having noted this, there is a somewhat different point to be made, which is much more relevant. The findings I have already made, and the evidence at this hearing, all point compellingly to the notion that if there a is lodestar in divining the actions of Qantas [Airways] in the current environment, it is the minimisation of costs. I accept that Qantas [Airways], at all material times, would have tried, if the rewards outweighed the risks, to minimise the costs of ground operations. To the extent this conclusion is useful, it always tended to point to the likely inevitability of retrenchment at some time in the future, should the outsourced employees be reinstated. Given my previous findings as to the overriding motivation of Qantas [Airways], its focus on costs savings, and its subjective commercial interests, even without the oral evidence at the hearing, I would have been inclined to think that another exercise in retrenchment by way of outsourcing any reinstated employees was likely to be attempted when considered practicable to do so. Indeed, it would have been naïve to think otherwise. The evidence of Mr Hughes and Mr David established beyond peradventure that Qantas [Airways] would only do what it was legally required to do in setting up a ground operations business (and no more) and retrench any reinstated employees as soon as it could.
Mr Hughes’ evidence was that if the affected employees were reinstated, he would recommend that their positions be promptly retrenched as it would be economically imprudent for Qantas Airways to re-establish its ground handling business to give them work. He was not asked in chief what he would recommend or do if reinstatement required Qantas Airways to re-establish its ground handling operations in order to provide the employees with work. The primary judge asked Mr Hughes whether a decision had already been made that if affected employees were reinstated into what Qantas Airways regards as redundant jobs, they would be retrenched afresh. Mr Hughes answered, “Yes”, and said that decision had been made by Mr David. Under cross-examination, Mr Hughes said that Mr David had said he would not recreate the in-house ground handling business function. Mr Hughes said later that Qantas would comply with any reinstatement orders requiring it to recreate its ground handling operations. He said that if reinstatement required Qantas to recreate the ground handling operation and affected employees were reinstated to such an operation, he could not be categorical as to whether he would recommend outsourcing. He stated that, “I would clearly still be of the strong view that the outsource provision was the best commercial outcome for the company”. However, he said that, “it’s impossible here today to be definitive about what my view would be in terms of any recommendation to outsource in the future”.
Mr David gave evidence under cross-examination that if a reinstatement order were made, he would seek advice, but unless ordered to do so by the Court, he would not re-establish the ground operations business. His explanation was that he would not, “unwind an initiative that’s going to save us $125 million per annum and put us in a position to be able to compete in the domestic market and ultimately grow back this business that has lost $20 billion of revenue over…the period of the pandemic”. Mr David was asked by the primary judge whether there was a particular decision he had made that in the event that the outsourced employees were reinstated, they would be retrenched, or that that would just always be the case following from his views about the commercial benefits of outsourcing. Mr David answered, “It’s the latter, your Honour”. Mr David also indicated that his decision would not be swayed by controversy or media attention.
The TWU is correct to say that the evidence of Mr David concerning retrenchment was limited to what Qantas Airways would do if reinstatement did not require it to recreate its ground handling operations, and that he did not directly give evidence as to what Qantas would do if it was required to recreate the ground handling business to comply with a reinstatement order.
The primary judge found that Qantas Airways’ commercial imperative of minimising costs pointed to, “the likely inevitability of retrenchment at some time in the future, should the outsourced employees be reinstated” (at RJ [154]). His Honour had earlier observed that Qantas Airways had made an unprecedented $1.826 billion loss before tax for the 2021 Financial Year, and reported approximately $5 billion in cumulative statutory losses for the 2020 Financial Year and the 2021 Financial Year, which was expected to grow. His Honour had also noted that Qantas Airways has raised in excess of $2.5 billion in debt and $1.4 billion in equity, and an additional $0.5 billion in debt had been announced through an unsecured bond placement. This funding has been necessary to support the Qantas Group’s operations through the COVID-19 pandemic, but had placed considerable pressure on its balance sheet position. Flying activity had dramatically decreased and there had been ongoing stand downs of employees in 2021 due to the ongoing impacts of the pandemic. Given the reduced flying activity and the extent of the stand downs, had Qantas Airways not decided to outsource its ground operations business in November 2020, Qantas Airways would have stood down large numbers of their ramp, baggage and fleet employees in 2021. Qantas Airways continues to face serious financial and operational difficulties as a result of the ongoing pandemic, and associated uncertainty about the level of future flying activity. His Honour indicated that he would have drawn an inference that there was likely to be retrenchments at some time in the future should the outsourced employees be reinstated even without oral evidence.
The primary judge considered that the evidence of Mr Hughes and Mr David, “established beyond peradventure that Qantas would only do what it was legally required to do in setting up a ground operations business (and no more) and retrench any reinstated employees as soon as it could” (at RJ [154]). Although evidence to that effect was not given directly by Mr Hughes or Mr David, it was an inference that was available from his Honour’s acceptance (at RJ [75]) of their evidence that the last six months had been one of the worst financial periods in the history of Qantas Airways, and caused the stand down of 10,000 employees since August 2021. His Honour accepted that the focus of Qantas Airways moving forward was seeking a return to normality, and on reducing costs and preserving liquidity. His Honour accepted that Qantas Airways’ perception was that the outsourcing had performed well in terms of savings and safety. Qantas Airways estimated that by the end of the 2023 Financial Year it would secure savings of approximately $125 million per annum by reason of the outsourcing of its ground operations. Qantas Airways had already (unlawfully) sought to outsource its ground operations. His Honour considered that the subjective view of Mr David that the savings secured by outsourcing are highly significant, and there was no prospect of that subjective view changing in the foreseeable future. His Honour inferred that Qantas Airways would not be deterred by the one-off cost and inconvenience of having recreated the in-house business function from proceeding with retrenchment of any reinstated employees. The inference drawn by his Honour was that if the affected employees were reinstated, their retrenchment would be attempted at some time in the future, as soon as legally possible.
The TWU argues that the primary judge mistook the evidence of Mr Hughes and Mr David in concluding that the first respondent would move to retrench reinstated employees as soon as possible. However, no such mistake has been demonstrated. His Honour’s conclusion was inferred from their evidence and from other evidence. That inference was available.
It cannot be accepted that Qantas Airways’ inferred intention to retrench any reinstated employees as soon as possible was irrelevant to the primary judge’s decision as to whether to make a reinstatement order. As has been discussed, his Honour was, in part, engaged in a comparative exercise of whether reinstatement and compensation for past economic loss, or compensation for both past and future economic loss, was the more appropriate remedy. In making the decision it was relevant to take into account the practical considerations which might detract from the benefits of reinstatement. One of those considerations was the prospect that Qantas Airways would continue to try to achieve lawfully that which it had done unlawfully. An order for reinstatement could not prevent Qantas Airways from retrenching its ground operations workforce though lawful means. While it is true that self-serving evidence of a witness as to what would be done in a hypothetical situation must be approached with caution (Martin v Norton Rose Fulbright Australia [2021] FCAFC 216; 395 ALR 413 at [142] per Jagot, Katzmann and Banks-Smith JJ; RRG Nominees Pty Ltd v Visible Temporary Fencing Australia Pty Ltd (No 4) [2019] FCA 686 at [192] per White J), the evidence of Mr Hughes and Mr David was not irrelevant. The prospect that Qantas Airways would retrench any reinstated employees was relevant to whether reinstatement was the more appropriate remedy.
The TWU submits that the primary judge failed to weigh and take into account the “window of opportunity” presented to Qantas Airways in 2020 to retrench its reinstated ground operations workforce. This window is submitted to have closed in 2020. It cannot be accepted that his Honour failed to take into account the practical considerations affecting Qantas Airways’ ability to retrench the ground operations workforce once reinstated. His Honour noted (at RJ [131]) the TWU’s submission that, “the ‘window of opportunity’ presented in 2020 with the QAL Agreement not being open would have vanished by the end of that year”. His Honour observed (at RJ [152)]) that there had been ongoing stand downs of employees in 2021 and that Qantas Airways continued to face serious financial and operational difficulties as a result of the ongoing pandemic, including uncertainty associated with the level of flying activity. These findings are not only inconsistent with the TWU’s submission that his Honour had failed to take into account the “window of opportunity” argument, but are inconsistent with the TWU’s submission that the window closed in 2020.
Ground 6 must be rejected.
Conclusion on the TWU appeal
The TWU has not established any of its grounds of appeal. It is therefore unnecessary to consider Qantas’ notice of contention.
CONCLUSION OVERALL
Both the Qantas appeal and TWU appeal must be dismissed. The TWU cross-appeal and the Qantas notice of contention do not arise. The TWU notice of contention is in any event not made out. We presume that no party has sought an order for costs because of the operation of s 570 of the FW Act, and no such order will be made.
I certify that the preceding four hundred and thirty-one (431) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Bromberg, Rangiah and Bromwich. Associate:
Dated: 4 May 2022
61
9
9